E- business and strategy execution By Nakato Ruth

Issues for strategic managers How do we explain the scope and implications of e-business and e-commerce to staff? What are the full-range of benefits of introducing e-business and what are the risks? How great will the impact of the Internet be on our business? What are the current and predicted adoption levels? How do we assess the validity of forecasts?

You are asked to distinguish between e- commerce and e-business at a job interview. Write down your definitions. Use examples to illustrate your points.

E-Commerce & E-Business Electronic commerce can take several forms depending on the degree of digitization (the transformation from physical to digital). The degree of digitization relates to: –the product (service) sold –the process –the delivery agent (or intermediary). E-commerce describes the process of buying, selling, transferring, or exchanging products, services, and/or information via computer networks, including the Internet. E-business refers to a broader definition of e-commerce, not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, conducting e- learning, and processing electronic transactions. Turban et al., 2005

Definition: Electronic Business (U.S. Census Bureau) Any process that an organization conducts over a computer-mediated network Production – procurement, ordering, stock replenishment, payment processing, production control, etc. Customer-focused – marketing, selling, customer order processing, etc. Internal or management-focused – employee service, training, recruiting, information sharing, etc.

Three definitions of the relationship between e-commerce and e-business

What is E-business? E-business (electronic business) is the conducting of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. The processes and tools that allow an organization to use Internet-based technologies and infrastructure, both internally and externally, to conduct day to day business process operations. Stands for electronic business and refers to any kind of sales, services, purchasing or commerce on the Internet. A new-tech jargon word used more for marketing than for technical description. Most commonly it broadly refers to conducting business over the Internet ( and web) by communicating and perhaps transacting (buying and selling) with customers, suppliers, and business partners.    

What is E-business? e-business Using internet technologies to transform key business processes Web l Universal Access l Standards IT l Data l Applications l Core business processes l Reliability, security and availablitiy e-business = Web + I/T

Definition: Electronic-Business Infrastructure The share of total economic infrastructure used to support e-business processes and conduct e-commerce transactions. – Hardware – Software – Telecommunication networks – Support services – Human resources

New Business Rules from E-Business Customers determine everything. Knowledge and information become more valuable than physical assets. People want more choices of products and services. Time is present time, distance is zero. Technology and network determine how the business is conducted.

E-business types: CONSUMERS C2C BUSINESS B2B ADMINISTRATION C2A B2C B2A

What is Consumers to Consumers (C2C) ? Abbreviation for consumer-to-consumer commerce; that is, commerce with no middle business people The most notable examples are Web-based auction and classified as sites. Most large venues for such models (for example, eBay and Classifieds2000) are quickly permeated by consumers who participate so actively and regularly that they become small businesses for them.  C2C stands for consumer to consumer electronic commerce. The Internet has facilitated new types of C2C although it is important to note that this kind of commerce -- in the form of barter, yard sales, flea markets, swap meets, and the like -- has existed since time immemorial. Notably, most of the highly successful C2C examples using the Internet actually use some type of corporate intermediary and are thus not strictly "pure play" examples of C2C. 

What is Business to Business (B2B) ? B2B stands for "business-to-business," as in businesses doing business with other businesses. The term is most commonly used in connection with e-commerce and advertising, when you are targeting businesses as opposed to consumers. Business-to-business electronic commerce (B2B) typically takes the form of automated processes between trading partners and is performed in much higher volumes than business-to- consumer (B2C) applications. On the Internet, B2B (business-to-business), is the exchange of products, services, or information between businesses. B2B is e-commerce between businesses. B2B Communication using XML over HTTP B2B - the basics   

What is Business to Consumers (B2C) ? Refers to businesses selling products or services to end-user consumers. B2B stands for transaction activities involving two business entities (business-to-business transaction). B2C stands for transaction activities involving a business and a consumer (business-to-consumer transaction). Electronic commerce comprises commercial transactions, involving both organisations and individuals. From the technical point of view e-commerce is the processing and transmission of digitised data. E-commerce decreases the distance between producers and consumers. Consumers can make their purchase without entering a traditional shop.   

Benefits of B2C e-Business Lower Prices Many products cost less online. Internet allows customers to easily compare prices from multiple sellers. Convenience Can order products from around the world anytime day or night. Can register customer information to streamline transactions. Personalization Emphasis on personalized, one-on-one marketing to increase repeat purchases.

What is Business to Administration (B2A) ?  Short for business-to-administration, also known as e- government. B2A is the idea that government agencies and businesses can use central Web sites to conduct business and interact with each other more efficiently than they usually can off the Web. FindLaw is an example of a site offering B2A services -- a single place to locate court documents, tax forms and filings for many different local, state and federal government organizations URA is also offering the same B2A.

E-business category  E-banks  E-trade  E-consulting  E-engineer  E-learning   E-marketing  E-transactions

WEB SERVER Merchant Storefront WEB SERVER Merchant Storefront How safe are e-Business financial transactions? New security technology like 128-bit SSL encryption ensures the safety and privacy of both you and your customers, and is built into the latest e-Business software tools. Your security and privacy is a top priority with all e-Business providers.  INTERNET WEB SERVER Merchant Storefront VIRTUAL POS PAYMENT GATEWAY Acquiring BANK Credit Card Network SSLConsumer Secure VPN

Capabilities and Benefits of E- Business Global reach. The Net allows goods and services to be sold to customers regardless of geographic location. Personalization. Companies can begin the production process when an order is received to better satisfy customer needs and sharply reduce inventory. Interactivity. Customers and suppliers negotiate prices online, resulting in an ideal product at the right price that satisfies both parties. Right-time and integrated marketing. Online retailers provide products when and where customers want them and can coordinate promotional activities and communication to create a unified, customer-oriented message. Cost savings. E-business can markedly reduce the costs associated with operating and starting a business.

Can my business benefit from e- Business?  Reduce administrative and operating costs  Reduce inventory costs  Reduce the cost of procurement  Improve customer service and satisfaction  Streamline procurement procedures  Increase communication efficiency and interaction with employees, vendors, customers and strategic partners  Increase revenues and profit margins

Potential Benefits of E-Business More product/service selections Higher Productivity Improved accessibility and convenience Better availability of information Shorter lead time Improved communication Stronger competitive position

Competitive Advantages of E-Commerce Offers personalized products/services Enables customer self-service Reduces lead time Reduces overall cost for seller and customers Improves utilization of resources throughout the supply chain Increases customer satisfaction and loyalty Expands to global marketplace

Barriers to e-commerce

Tasks Performed by Customers Browse catalogs Conduct research on products/services Configure and place orders Look up pricing Look up lead time and order status Access invoicing information Access customer service information

B2C E-commerce Implementation Strategies Educate the customer Make the shopping fun Serve customers well Personalize the sales pitch Cross sell and up sell Low price Painless returns

The Internet’s Influence on Industry Structure – Michael Porter Bargaining power of supplier Bargaining power of buyers Rivalry among existing competitors Barriers to entry Threat of substitute products or services

Launching E-Business Initiatives Define what an e-business initiative means for the organization. Ask key questions to develop a strategy. Communicate the plan to executives and employees extensively. Prepare for mistakes and develop effective recovery systems.

Privacy is among the top concerns of Internet users. E-business sites often require passwords and use electronic signatures, an electronic form of identity verification. Companies can track customers’ shopping and viewing habits through cookies. Customers usually prefer that companies do not share their personal information. Merchants have responded by joining privacy organizations. Privacy protections may soon become legally required. Employees also have concerns that employers are monitoring their Internet behavior. Companies worry about data theft. E-Business Challenges (privacy)

Internet Crime Complaint Center logs more than 200,000 complaints annually.Internet Crime Complaint Center 50% of the complaints referred to law enforcement agencies deal with online auctions. Phishing is a growing form of Internet fraud that uses or pop-up messages to get unsuspecting victims to disclose personal information. Vishing, or voice phishing, involves phone calls to credit card customers to obtain personal and banking information. Payment fraud is growing. E-Business Challenges (Internet Fraud)

50% of shopping carts are abandoned before any purchase is made. –Lack of Information –Inability to find the information they need –Feeling overwhelmed by too much information Companies that have brick-and-mortar experience often have better success satisfying customers than Internet-only retailers. Online sales can compete with business partners such as retailers and distributors causing disputes called channel conflict. E-Business Challenges (poor website design)

Increase a firm’s visibility, promote its offerings, and provide information to interested parties. Build customer goodwill and assist retailers and other resellers in their marketing efforts. Disseminate financial information to investors. Enable prospective employees to apply online for jobs. Provide communication.. Business Web Sites Web sites are frequently used for marketing to attract visitors/customers.

Business Web Sites Corporate Web site Web site designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties. Attempt to build customer goodwill and assist retailers and other resellers in their marketing efforts. Use for a variety of other purposes Disseminating financial information to investors Enabling prospective employees to apply online for jobs Providing communication. Marketing Web site Web site whose main purpose is to increase purchases by visitors.

Business Web Sites… Electronic Data Exchange Computer-to-computer exchanges of invoices, purchase orders, price quotations, and other sales information between buyers and sellers. Extranet Secure networks used for e-business and accessible through the firm’s Web site by external customers, suppliers, or other authorized users. Private Exchanges A secure Web site at which a company and its suppliers share all types of data related to e-business. Sometimes called c-business because of use as a collaborative tool.

Business Web Sites… Electronic exchanges are online marketplaces that bring buyers and sellers together and cater to a specific industry’s needs. E-procurement is Web- based systems that enable all types of organizations to improve the efficiency of their procurement processes.

Developing Safe Online Payment Systems Response to customer concerns about security of sending credit card information over the Internet. Through encryption, data is encoded for security purposes. Many companies use Secure Sockets Layer (SSL) technology to increase to encrypt information and verify senders and receivers. Others use electronic method payment method, a computer data file at an e-business site’s checkout counter that contains not only electronic cash but credit card information, owner identification, and address.

MANAGING A WEB SITE Developing Successful Web Sites Planning and Preparation What is the company’s goal for its Web site? Will the site be maintained in-house or by a contractor? What will the site be named? Content and Connections Content an important factor for whether visitors return to a site. Resources should be relevant, easy to access and understand, updated regularly, and compelling. Small businesses may be better off outsourcing to meet their hosting and maintenance needs.

Costs and Maintenance Variety of costs: Development Placing the site on a Web server. Maintaining and updating the site. Promoting the site.

Revision question “If organisations want to stay competitive, they need to understand the importance of E- business to successful strategy execution’’ (Thompson and Strickland, 2010) Discuss the strategy shaping characteristics of the E-Business environment as it applies to a company operating in today’s dynamic environment, giving examples to support your answer

Using relevant examples discuss the possible E- business challenges that business managers are likely to encounter in strategy execution.